Putting all the insurance proceeds from Queen Elizabeth II park into the new metro sport facility is a "rip-off", a city councillor says.

Burwood-Pegasus councillor Glenn Livingstone said he had no idea until Thursday that the insurance money from QEII would not be available to pay for the promised new aquatics facility in the east.

"It was never declared to councillors that it had been allocated elsewhere. Councillors were kept in the dark over that," Livingstone said.

Livingstone said he and his then council colleague Peter Beck had originally argued that all of the $70 million in insurance proceeds from QEII should have gone into a new facility in the east, but had agreed to a compromise of $30.5 million. To find out even that amount was not available was devastating.

"I think it is a rip-off," Livingstone said.

Community groups in the east have been left reeling by the news the insurance proceeds from QEII, which they thought were available to fund the new facility, have been allocated to the new metro sports facility in the central city.

That does not mean the project will not proceed, but it does raise serious questions about where the already cash-strapped council is going to find the money for it.

Paul Zaanen, manager of the New Brighton Business and Landowners Association, which has spent nearly a year and around $95,000 working on a proposal for a pool development on the New Brighton foreshore, said he was appalled the council appeared to have given commitments to projects without having a clear understanding of where the money for them was coming from.

"Our consultants have been talking to council staff and councillors for the past 11 months and we only just find out that money doesn't exist? It is just ridiculous" Zaanen said.

Tim Sintes, who was the driving force behind the original proposal for a water park in New Brighton, said news the QEII money was all being diverted to the new metro sports facility had gutted the community.

"It is a huge blow to people's hopes on this side of town," Sintes said. "The east is not happy at the moment; there is an under-resourcing of community assets in the east."

Keep QEII in the East spokeswoman Jo Zervos said they had been told a new aquatics facility in the east would take priority over a new metro sports facility and they had taken the council at its word. "It is really, really disappointing that it has come to this," Zervos said.

The council had committed to putting $30.5 million into aquatics facilities in the east and the community expected it to honour that commitment.

Council community services general manager Michael Aitken said the council's decision to develop a new recreation and sports facility in the eastern suburbs had not altered. It had already budgeted $30.5 million for this facility, which would provide a similar resource to Jellie Park. The council funding would be supplemented by $6.5 million from the Christchurch Earthquake Appeal Trust for water attractions such as hydro slides and rides.

A headline in The Press yesterday suggested the eastern aquatics facility was on hold. That is not the case. The council has yet to make a decision on the facility.